Jump to ContentJump to Main Navigation
The Political Economy of Hunger: Volume 3: Endemic Hunger$

Jean Drèze and Amartya Sen

Print publication date: 1991

Print ISBN-13: 9780198286370

Published to Oxford Scholarship Online: January 2008

DOI: 10.1093/acprof:oso/9780198286370.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 05 August 2020

3 Growth and Poverty: Some Lessons from Brazil

3 Growth and Poverty: Some Lessons from Brazil

Chapter:
(p.93) 3 Growth and Poverty: Some Lessons from Brazil
Source:
The Political Economy of Hunger: Volume 3: Endemic Hunger
Author(s):

Ignacy Sachs

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198286370.003.0004

Abstract and Keywords

Brazil provides an ideal example of a country which has seen very rapid and sustained economic growth and spectacular modernization, going hand in hand with persistent poverty, malnutrition, and occasional hunger afflicting a substantial fraction of the population. This chapter examines why economic growth has failed to uplift the living standards of millions. Brazil's social profile is much lower than expected, and the growth pattern has a built-in bias towards social inequality the non-rectification of which will lead only to further polarization. However, Brazil can afford to build a welfare state by employing public support measures with comprehensive coverage which have a high manpower component and a low capital and foreign exchange component.

Keywords:   authoritarian regime, inequality, agricultural expansion, dualism

Social development and elimination of poverty are hardly conceivable without sustained economic growth, although a once for ever change in asset distribution may bring about a lasting improvement in the entitlements of the hitherto dispossessed, even in a stationary economy. From the fact that sustainable economic growth is a necessary condition for a socially meaningful development process, it does not follow, however, that social development is subsumed in economic growth. Country after country has learned the hard way that the so‐called trickle‐down theory is fallacious; that growth can be immiserizing for a sizeable segment of the population; that famines also happen in periods of boom when people's entitlement does not allow them to buy and/or produce the food necessary to keep them alive (Sen 1981); that the anti‐inflationary package recommended by the IMF leads to stagflation, with devastating social consequences in countries which cannot afford to stop growing, because of the demographic pressure of new entrants on the labour market and of the backlog of unemployment and underemployment.

If a country is set on the path of maldevelopment, observable through the high attendant social and ecological costs, then the higher the rate of growth, the greater the damage done to those who are the victims and not the beneficiaries of such a process. Obviously, no country follows an optimal development path, nor an utterly negative maldevelopment one. Development and maldevelopment are but heuristically useful logical constructs, which help us to ask relevant questions about complex historical configurations (Sachs 1984).

Brazil represents the most extreme case of a very rapid and sustained economic growth—about 7 per cent per year over the forty years 1940–80 —and a spectacular modernization, going hand in hand with persistent poverty, endemic malnutrition, and occasional hunger. The exorbitant social and ecological price paid for this performance is even more surprising, given Brazil's extremely favourable resource and land endowment. The absence of a more generalized trickle‐down effect cannot be blamed in this case on adverse natural conditions. Its roots must be sought in the working of the socio‐economic system and of the political regimes often described as peripheral, dependent, or retardatory capitalism (see e.g. Furtado 1956; Cardoso 1980; Cardoso de Mello 1982).

(p.94) 3.1. Growth through inequality and lopsided modernization

As successive Brazilian governments have sought to derive their legitimacy from the rapid rate of economic growth, the wealth of statistical data and studies on the process of economic expansion contrasts with the dearth of reliable studies on the social condition of the Brazilian people.

Brazilian industrialization took off in the 1930s in a somewhat paradoxical fashion. The country, at that time dependent on exports of coffee and a few other agricultural commodities, was so severely hit by the great depression that imports came to a standstill. But in order to rescue the influential coffee planters, the government continued to buy the coffee surpluses and to burn them. This Keynesian policy avant la lettre was instrumental in creating demand for domestically produced industrial goods, as well as in generating private savings eager to invest in manufacturing ventures. São Paulo—the main coffee‐producing state—took the lead in the industrialization process, to become the largest industrial centre in Latin America.

The Second World War gave a new momentum to the industrialization drive, but the decisive push came from President Kubitschek's ‘fifty years in five’ modernization programme (see e.g. Furtado 1956, and Draibe 1984). Then came the so‐called ‘Brazilian miracle’ under the authoritarian regime, which provided ideal conditions for the concentration and accumulation of capital in the hands of multinationals, huge public sector enterprises, private banks, and industrialists by keeping the working‐class earnings at abnormally low levels and allowing for a continuous deterioration of income distributions.1

Brazil responded to the 1973 oil shock by an overambitious, yet ultimately fairly successful, programme of import‐substituting heavy industrialization, stepping up the domestic output of oil, steel, non‐ferrous metals, paper, and cellulose as well as expanding the capital goods industry. Without this newly created import‐substituting export capacity, the country could never have afforded to service a foreign debt of over $100 billion to the tune of 50 per cent of exports and 4 to 5 per cent of GNP transferred abroad year after year (see Barros de Castro and Pires de Souza 1985).

Quite obviously the burden of servicing the foreign debt and the snowballing internal debt (caused by the need to buy foreign exchange from private exporters) constitutes a severe drain on potential savings that even such a resource‐rich country as Brazil cannot tolerate for long. A renegotiation and not mere rescheduling of foreign debt is a sine qua non for correcting Brazil's course and taking up the long overdue problems of the substantive ‘debts’, namely the ‘social debt’ and the ‘ecological debt’.

(p.95) By conventional standards, Brazil has also accomplished a very successful modernization. It has the eighth largest economy in the capitalist world, with a fairly integrated industrial structure capable of operating with a very low import content. About 70 per cent of its population is urbanized (see Figs. 3.1, 3.2).2 Many of them live in large metropolitan cities, such as São Paulo (14 million), Rio de Janeiro (10 million), Belo Horizonte, Recife, Fortaleza, Salvador, Pôrto Alegre, and Curitiba (all of them with a population above 1.5 (p.96) million). Brazil indulged in the luxury of building a new capital—Brasilia—famous for the quality of its architecture and design: the first large city in the world planned for cars rather than for people. Brazil's motor car factories—all belonging to large multinationals—produced over one million automobiles in 1986, out of which about one‐quarter were exported. Brazil is also the fifth world exporter of weaponry and has been selling planes to the Royal Air Force of the United Kingdom. Brazilian surgeons are renowned for their ability in performing complicated transplants and marvellous plastic operations. Yet, as we shall see subsequently, the country's social indicators are dreadful. In a sense, the situation is the reverse of what happened in Sri Lanka, China, Cuba, or even Kerala (see Gunatilleke et al. 1984; Panikar and Soman 1984; Raj et al. 1975): Brazil's social profile is much lower than could be expected for a country at this level of technical sophistication, industrial advancement, and overall economic development.

3 Growth and Poverty: Some Lessons from Brazil

Fig. 3.1. Growth of population and annual rates of growth, Brazil, 1940–1980

Source: Conjuntura economica, Mar. 1985.

3 Growth and Poverty: Some Lessons from Brazil

Fig. 3.2. Growth of urban population and annual rates of growth, Brazil, 1940–1980

Source: Conjuntura economica, Mar. 1985.

A well‐documented report on social policy points to the ‘brutal contrast’ between Brazil's economic indicators, which give the country the status of the eighth largest economy in the Western world, and its social indicators, which are comparable to those of poor Asian and African countries (Jaguaribe et al. 1986).

Beyond short‐term immediate relief and welfare measures, the report proposes a fifteen‐year reformist blueprint aimed at bringing Brazil to the level of contemporary Greece in terms of basic social indicators. It goes a long way to show that this is a feasible goal, on the condition of correcting the present distortions in the remuneration of factors: the excessive concentration of income in Brazil results from a conjunction of severe underpayment of the labour force, of much too generous rewards for capital—mostly the financial one—and of an insufficient socialization of the economic surplus (Jaguaribe et al. 1986: 101).

The report insists on the need to increase sharply the supply of foodstuffs while reducing their prices. In this context, it rightly points to the as yet unexplored potential for better use of available land, postulating a steady increase in agricultural employment at a rate of 2 per cent a year while taking a strong stand in favour of agrarian reform.

It is to be hoped that Brazilian planners will not forget the lessons of the past and will keep in mind that ‘some kinds of 10 to 12 per cent growth per annum can lead to an increase in poverty rather than to its eradication’ (Kurien 1978: 15–16). The temptation of a three‐level reductionism must be resisted: development requires more than the steering of the economy; this, in turn, calls for something more than growth alone; lastly growth depends on non‐investment factors along with investment.

We turn now to some significant structural aspects of the Brazilian development/maldevelopment process.

(p.97) (a) Perverse growth and social inequality

As already mentioned, the growth process in Brazil has a built‐in bias towards social inequality, or, to put it differently, the state has not imposed up to now any checks against this natural trend in an unbridled capitalist growth. On the contrary, the authoritarian regime, which lasted for over twenty years (1964–84), succeeded in weakening the trade union movement, dismantling the radical left‐wing opposition, and slowing down, if not preventing altogether, the emergence of strong peasant organizations. However, Brazilian civil society managed to organize itself in thousands of grassroots action groups, ecclesial communities (supported by the progressive wing of the Catholic Church), neighbourhood associations, women's organizations, black and youth movements, etc. All these were instrumental in progressively changing the political climate and pushing through local demands, but they were unable to influence the income distribution processes in a significant way (see Singer and Brandt 1980 and Cardoso and Sachs 1985). Ultimately, the emergence of these movements, and of what Rajni Kothari calls ‘non‐party politics’, played an important role in the gradual liberalization of the regime (the so‐called ‘abertura’) and the handing back of power to civilians.

In São Paulo independent trade unions, mainly supported by metal workers—by far the best paid in Brazil—succeeded in creating a new left‐wing Workers' Party—PT. But before 1986 the recession and mounting unemployment prevented the emergence of a suitable environment for successful bargaining for a greater share of wages in value added. The stabilization plan, implemented since February 1986, theoretically puts a brake on the workers' demands while guaranteeing price stability.3 In practice, some upward adjustments of wages occurred under the impact of the buoyant conjuncture, to be soon offset once more by the upsurge of inflation. At any rate, they have not significantly affected as yet the extremely skewed income distribution pattern. Industrialists do not object to the co‐opting of the workers' aristocracy to middle‐class lifestyles, so long as they can rely on the steady inflow of new labour—mainly rural migrants—ready to take unskilled jobs for low pay.

The middle and upper classes account for the bulk of consumption expenditure. Accordingly, the Brazilian industrial structure is biased towards the production of durables, motor cars, and middle‐ and upper‐class housing, in short ‘luxuries’ (L), as opposed to ‘essentials’ or ‘necessities’ (N)—basic goods and housing for low‐income people. The L‐sector competes successfully with the N‐sector for capital and intermediate goods, skills, technical know‐how, scarce foreign exchange, and public savings. The U‐city (for upper class) absorbs most of the public resources spent on the maintenance, upgrading, and expansion of urban infrastructure (see Fig. 3.3 for a schematic representation of ‘development’ and ‘maldevelopment’).

3 Growth and Poverty: Some Lessons from Brazil

Fig. 3.3. A schematic representation of development and maldevelopment

The imbalance between the L‐sector and the N‐sector is further accentuated (p.98) by the situation prevailing in agriculture. Large landowners get all the incentives to produce commodities for export and, more recently, sugarcane alcohol used as a substitute for petrol (about 90 per cent of all the cars now produced in Brazil are entirely alcohol powered). Food production for the internal market is, however, lagging behind and staple food availability per capita has been dwindling. As was to be expected, food prices had been pushing up inflation, the low‐income people being the hardest hit because food takes a larger proportion of their earnings.4

The Brazilian growth pattern in the late 1950s, already based on the hypertrophy of the L‐sector, was interpreted by this author as a case of ‘perverse growth’. Given the shallowness of the market for L‐goods, in the absence of land reform opening a market for mass production of consumer goods, industry would soon be faced by a saturated demand and growth led by luxury consumption would come to a standstill.

This prediction proved wrong. Why? Four factors were underestimated:

  1. 1. the deepening of the domestic market for L‐goods through further deterioration of the income distribution and encouragement of extravagant consumption patterns: 28.3 per cent of Brazilian urban house‐holds owned cars in 1980, many of them at the expense of inadequate nutrition; thus the laws of Engel appear to have been distorted by the ‘proletarization of durable goods consumption’ (Denslow and Tyler 1983);

  2. 2. the role played by the opening of the economic frontier and the incorporation, (p.99) often predatory, of new natural resources into the GNP (a process that recalls Rosa Luxemburg's argument on the need for capitalism constantly to appropriate new non‐capitalist territories in order to grow);

  3. 3. the capacity to expand industrial exports. This was due to several factors: the speed at which Brazil absorbed modern technologies, the competitiveness of its products thanks to a combination of cheap natural resources, underpaid labour, and aggressive trade policies on the part of the government, and finally the expansion of world trade;

  4. 4. the possibility of raising foreign loans on a massive scale from private banks eager to recycle ‘petrodollars’.

Bardhan (1985: 20) is therefore right: ‘A home market concentrated in the upper income segments of the population is, of course, not necessarily a constraint on the rate of industrial growth. If exports expand sufficiently, or if the rich get richer at a sufficiently rapid rate and spend their booming income on “luxury” consumption and reinvest their profits, industrial growth may not be broad‐based or wholesome, but it can be fast, as the recent history of countries like South Korea or Brazil has shown us.’ The other side of the coin is, of course, the exclusion of the poor majority from the benefits of such growth.

(b) Belindia

In order to be able to absorb growing quantities of L‐goods, Brazil was transformed into a BELINDIA (the neologism was coined by E. Bacha): a Belgium in the middle of an India, with parts of Nordeste comparable to Bangladesh. Industrialization had the opposite effect to that anticipated by Arthur Lewis. Instead of gradually exhausting the reserve of unskilled labour by drawing it into the modern organized sector, it deepened the process of exclusion and social segregation, creating a huge surplus of underemployed labour in the cities, including the category of ‘boias frias’, casual agricultural workers expelled from the rural areas by the mechanization of large estates and forced to live in towns while continuing to work in agriculture during the harvest and planting seasons.

Hence the proliferation in the urban economy of all sorts of petty jobs and activities, inadequately described as the ‘informal sector’. In reality we are in the presence of a maze of interconnected labour, service, and goods markets, ranging from organized business to organized crime, a non‐market household sector, as well as an incipient non‐market social sector based on mutual help (mutirão). These structures of everyday life are affected by public policies, sometimes in a positive way (e.g. food subsidies), sometimes in a negative way (e.g. policies of eradication of shanty towns or repressive measures against pedlars and hawkers). In Brazil these activities account for much of housing production (in the ‘illegal city’ to use the terminology of Hardoy and Satterthwaite 1987) and an unknown share of unaccounted income. The (p.100) existing estimates are utterly unreliable and often based on ideological prejudices.5

Little is known about the forms of exploitation to which independent workers are subjected by gangs, middlemen, and money‐lenders, their levels of income, the organization of markets, the extent of smuggling (important as far as gold and precious stones are concerned), illegal gambling beside the popular illegal lottery (jogo do bicho), etc. The urban economy increasingly takes the form of a ‘two gear economy’ with a minority of highly productive and well‐remunerated people and a majority that struggles for survival. Children and teenagers (0–19 years) account for 47 per cent of the population. Out of their 63 million, 36 million are needy and one‐fifth among them, i.e. 7 million, are abandoned and, therefore, forced to live on their own, often in the streets of large cities. The government provides shelter and schooling for 427,000 (data collected by FUNABEM, the agency entrusted with the protection of abandoned children).

Add to this the disparities between the cities and the countryside, between the relatively affluent and industrialized South‐East provinces and the depressed Nordeste. As for the prospects, the debate goes on between those who see the Brazilian growth process in terms of continuity and those who see it as dichotomy. Bacha and Klein (1986: i.21) leave the following question unanswered: ‘An incomplete or distorted capitalist growth? Do the superior and middle urban classes in São Paulo represent the advanced frontier in direction of which most Brazilians will move? Or else, do they constitute an enclave ever more distant from the rest of Brazil?’ In this author's opinion the present growth pattern, if uncorrected, can only lead to further polarization of Brazilian society. This is not to say that some effects of rapid growth do not trickle down to the lower strata of the population. But the real question is, how much more could be achieved for them in the same lapse of time through structural reforms; what kind of social and ecological costs could be avoided while sustaining a reasonable rate of growth; what opportunities for genuine development are being at present forgone in such an exceptionally well‐resource‐endowed country as Brazil?

(c) Agricultural expansion: dualism revisited

Brazil is blessed with the largest reserve of arable land in the world. In the ‘cerrado’ region alone—the savannah‐like extensions of central Brazil—there are over 150 million hectares of cultivated land, not to speak of the Amazon (p.101) region, less amenable to open field cultivation but propitious to well‐designed agro‐sylvo‐pastoral systems.

For many decades, agricultural output has been growing at a rate superior to that of per capita income, i.e. within the range of 4 to 5 per cent a year. Brazil has also become the second largest agricultural exporter in the world. Exports of soybeans, orange juice, and poultry have shown great dynamism in recent years. Yet, the country numbers 7 million landless peasant families while the 100 largest landowners possess 29.6 million hectares. Altogether, private properties cover 569.8 million hectares distributed in 4.1 million holdings, out of which only 80 million are cultivated. The top 1 per cent of holdings controls 231.5 million hectares and the top decile 432.4 million hectares, that is over three‐quarters of the whole area. At the other extreme, the 2 million holdings below 50 hectares each account for only 46.5 million hectares (1984 Agrarian Census, IBGE, quoted by EXAME, 11 June 1986).

Historically, Brazilian agriculture developed a dualist structure with, on the one hand, large latifundia and, on the other, subsistence‐oriented minifundia, both characterized by an extensive pattern of land utilization. The increments in production have been brought about essentially by the addition of cultivated land (see Table 3.1). Technological innovation has been confined to a few exportable and industrial crops.

Table 3.1 Brazil: cultivated area, 1950–1980 (m. hectares)

1950

1960

1970

1980

Total

19.10

28.71

33.98

49.19

Permanent cultures

4.40

7.80

7.98

10.50

Temporary cultures

14.69

20.91

26.00

38.69

Source: FIBGE (1982).

It has been argued (Oliveira 1972) that the primitive minifundia played an important role in the process of capitalist accumulation by opening for cultivation, at a very low cost, virgin land in frontier areas and by supplying cheap foodstuffs to the urban population; the economic surplus generated through these operations ultimately accrued to urban capitalists. However, a recent survey has shown that the majority of small holdings participate only marginally in the production of traded surpluses. They remain essentially a reserve of a severely underemployed labour force, marginalized by the processes of agricultural modernization and industrialization (see Goodman 1986). At the same time holdings of up to 100 hectares, occupying one‐fifth of total cultivated land, account for 80 per cent of the production of cassava, 77 per cent of beans, 68 per cent of corn, 46 per cent of soybeans, and 37 per cent of rice (EXAME, 12 Nov. 1986).

By contrast, the last fifteen years have been marked by a process of intensive modernization of an important segment of large holdings, oriented predominantly towards foreign markets and the production of industrial crops, the most (p.102) important being sugarcane for the extraction of ethanol used as a substitute for petrol.6 The emphasis put on the production of sugarcane, together with the priority accorded to exportable cash crops, had a backlash effect on the production of staple foods. Between 1977 and 1984 the per capita production of food crops for the internal market decreased at a compound annual rate of 1.94 per cent, while export crops increased at a rate of 2.5 per cent and sugarcane at 7.8 per cent (Homem de Mello 1985). According to a recent estimate, the per capita supply of staple foods decreased by 8.8 per cent between 1977 and 1986 (EXAME, 12 Nov. 1986).

This recent modernization was made possible by an abundant supply of subsidized credits for the purchase of equipment, fertilizer, and pesticides, benefiting mainly the large farms and resulting in a sharp segmentation of the market. Goodman (1986) is right to say that it took the ‘Prussian path’, as was to be expected under the authoritarian regime committed to an overall project of ‘conservative modernization’. ‘Industrializing’ the processes of agricultural production and encouraging multinational agribusiness companies to set up subsidiaries in Brazil was preferred to undertaking a land reform that would give landless peasants access to land and improve the viability of small family‐operated farms.

A socially disruptive consequence of this trend has been the ‘emptying of occupied spaces’ (Abramovay 1986), i.e. the acceleration of the rural exodus from the most successful agricultural producing areas taken over by large‐scale, heavily mechanized production of soybeans and sugarcane. From 1970 to 1980 the rural population of the country decreased for the first time, by 2.4 million in absolute terms. The contrast is striking indeed with the previous trend: from 1940 to 1950 it had increased by 4.8 million, from 1950 to 1960 by 5.6 million, and from 1960 to 1970 by 2.3 million (Goodman 1986). The rural exodus continues through the 1980s at a rate of about 900,000 people per year. Altogether, between 1960 and 1980, some 27 million people migrated from the countryside to urban areas unable to absorb such a huge contingent of additional labour force (Abramovay 1986), not to speak of the prohibitive costs of this massive urbanization.

The situation is therefore paradoxical, especially when compared with densely populated yet predominantly rural countries like China or India. Millions of people could still settle in the Brazilian countryside, both by means of colonization schemes on public land and by redistributing the unproductive latifundia. The theoretical limit of agricultural employment in Brazil, assuming a land‐man ratio ten times as high as in Asia and the present level of (p.103) technology, has been estimated at 66.6 million people, i.e. more than the entire economically active population of the country! However, due to a combination of institutional factors (the tenure system) and of an ill‐conceived modernization pattern, millions of ‘rural refugees’ are unnecessarily pushed to the cities, creating a major problem in terms of urban infrastructure, housing, and jobs.

The urbanization costs thus incurred will end up by taking a sizeable parcel of savings from productive investment, the more so since the maintenance costs of the cities tend to increase as the cities grow older. It may be reasonably assumed that the cost of settling peasants on, say, 25‐hectare holdings, and helping them to develop integrated farm systems well adapted to agroclimatic conditions, would be far smaller. Government sources expect to implement the land reform at a cost of $3,000 per family. This appears, however, to be a severe underestimate. Other sources put it at $15,000 (EXAME, 12 Nov. 1986). Furthermore, land reform would promote the growth of small towns, as farmers would need their services and could afford to pay for them. By contrast, large estates with few employees usually bypass the local urban centres in their dealings.

Land reform is thus long overdue. It has been on the agenda of Brazilian politics for the last forty years and, in principle, figures prominently among the objectives of the new democratic government. It is hard to conceive how a policy aimed at making a dent in the accumulated poverty could be implemented in Brazil without a redistribution of land assets. The land reform announced in 1985 was supposed to benefit 9.4 million peasant families by 1989, using 71 million hectares of public land and up to 400 million hectares of unproductive private land, expropriated with monetary compensation. The landowners threatened to use weapons. Violence spread and hundreds of people lost their lives, many among them peasant trade unionists. The reform was subsequently watered down. Mainly public land will be used. Meanwhile, only about 7,000 families got their property titles, out of the 150,000 initially contemplated for the first year of the reform. In spite of the strong pressure of the Catholic Church, firmly committed to the reform, the government is taking a cautious attitude to the disappointment of peasant trade unions.

(d) The ‘ecological debt’

Growth through inequality breeds environmental disruption at both ends of the social spectrum. Rich people indulge in extremely wasteful patterns of resources use, be it through lavish consumption patterns, extensive and predatory uses of land and forest, or careless technology—the industrial centre of Cubatão near Santos is probably one of the most polluted places in the world due to the excessive concentration of steel mills, oil refineries, and chemical plants, this in a country of 8.5 million square kilometres for a population of 135 million. Poor people living from hand to mouth, in particular the small ‘minifundistas’ with not enough land and the squatters in the pioneer areas, with no security of tenure whatsoever, end up by overtaxing or plundering (p.104) their life‐support systems by indiscriminately felling the forest, allowing pastures to be overgrazed, and causing widespread erosion by inadequate handling of fragile tropical soils. Thus, the land tenure system is also at the root of the ecological question.

3.2. How many poor?

As already mentioned, data on the social profile of Brazil are scanty and often contradictory. Authors diverge, as would be expected, on the definition of the poverty line. Calsing (1983) proposes five different concepts. Households below the ‘poverty line’ are those whose income is less than double the cost of the basic food basket. Households below the ‘destitution line’ have a purchasing power inferior to the cost of the food basket. Households below the ‘relative poverty line’ have an average income inferior to half the average per capita income of all the households. Families in ‘extreme poverty’ are those whose per capita monthly income is inferior to 0.25 SM (Salário Mínimo—Minimum Legal Wage). Finally, families in ‘relative poverty’ are those whose monthly per capita income ranges from 0.25 to 0.5 SM. His results are summarized in Table 3.2.

Table 3.2 Estimates of households and families in a situation of poverty, Brazil, 1970 and 1980

1970

1980

Percentage of households below the poverty line

Total

49.0

43.0

Urban

35.0

31.0

Rural

73.0

70.0

Percentage of households below the destitution line

Total

25.0

21.0

Urban

15.0

12.0

Rural

42.0

41.0

Percentage of households below the relative poverty line

Total

54.0

42.0

Urban

52.0

28.0

Rural

57.0

68.0

Percentage of families

In extreme poverty

Total

43.9

17.7

Urban

22.6

6.5

Rural

61.2

36.0

In relative poverty

Total

25.2

23.1

Urban

28.1

18.2

Rural

22.8

32.1

Source: Compiled by Calsing (1983).

Jaguaribe's findings, based on the 1984 sample survey conducted by FIBGE, are the following.

Out of an economically active population of 52.4 million, 29.3 per cent of the actually employed earned less than 1 SM per month (the proportion is 42.9 per cent for the rural employed). 22.6 per cent earned between 1 and 2 SM. Another 12.9 per cent did not have any income. Table 3.3 gives the regional distribution.

Table 3.3 Economically active population, Brazil and regions, 1984: relative share of the three lowest earning strata (%)

Brazil

North

Nordeste

South‐East

South

West centre

≤ 1/2 SM

13.4

7.1

25.4

9.5

8.5

9.3

> 1/2 ≤ SM

22.8

17.7

29.8

20.5

19.6

21.1

> 1 ≤ 2 SM

25.0

27.0

23.4

24.4

27.7

29.3

Source: FIBGE (1984: 3.16).

In the Nordeste 25.4 per cent of the economically active population earns less than 0.5 SM and another 30 per cent earns between 0.5 and 1 SM. The Sen poverty index, calculated by Jaguaribe, assumes the following values for different regions: Brazil 0.516, Nordeste 0.780, Sudeste 0.380, South 0.299.

Turning now to data by families, out of 31,075,602 units, 24.3 per cent had monthly incomes inferior to 1 SM and another 4 per cent no monetary earnings at all. Those with monthly earnings between 1 and 2 SM numbered 24.3 per cent. Altogether, more than half of Brazilian families had incomes below the poverty line and over one‐quarter were below the indigency line.

Roughly the same picture emerges from the calculation by Helga Hoffman (1986).

Still another report on the North‐East region (Calsing et al. 1985) reached the conclusion that 70 per cent of the families there had a per capita income inferior to 0.5 SM per month, i.e. less than the cost of the basic food ration.

A World Bank Study (Hicks and Vetter) recommended for the cities a poverty line ranging from 3 to 4 SM per family to allow for cost of living differences.

All these studies, imperfect as they may be, and not always comparable as (p.105) (p.106) they use slightly different concepts of ‘households’ and ‘families’, converge to give a staggering picture of deprivation for a country with a GNP per head around $2,000 per year (and probably more in terms of purchasing power parity) which has gone through an intensive industrialization process and managed to create millions of new secondary and tertiary jobs: employment in the secondary sector increased by 2.36 million from 1960 to 1970 and 5.38 million from 1970 to 1980, the corresponding figures for the tertiary sector being 3.64 and 8.84 million (Faria 1983). The relative numbers of the destitute and very poor may have decreased between 1970 and 1980, but the absolute numbers are still very high when contrasted with the economic potential of the country.

It should be noted in this connection that a modest redistribution of income would be sufficient to eliminate abject poverty. According to Helga Hoffman (1986), it would be enough to transfer every year 2 per cent of the total income to the families below the destitution line to push them above this line: 0.8 per cent in the South‐East region, but 7.3 per cent in the North‐East; 1 per cent in the urban areas, 8 per cent in the countryside. However, the corresponding figures for the poverty line are much higher: 8.8 per cent for the country as a whole, 25.1 per cent in the North‐East region, 4.1 per cent in the South‐East; 4.9 per cent in urban areas, but not less than 34.5 per cent in the countryside.

Widespread poverty goes hand in hand with an extreme concentration of income. The distribution of income among the economically active population is given in Table 3.4.

Table 3.4 Income distribution (economically active population), Brazil, 1960–1980

Deciles

1960

1970

1980

%

%

%

%

%

%

cumulative

cumulative

cumulative

First

1.9

1.9

1.2

1.2

1.1

1.1

Second

2.0

3.9

2.2

3.4

2.1

3.2

Third

3.0

6.9

2.9

6.3

2.9

6.1

Fourth

4.4

11.3

3.7

10.0

3.7

9.8

Fifth

6.1

17.4

4.9

14.9

4.3

14.1

Sixth

7.5

24.9

6.0

20.9

5.5

19.6

Seventh

9.0

33.9

7.3

28.2

7.3

26.9

Eighth

11.3

45.2

9.9

38.1

8.9

36.8

Ninth

15.2

60.4

15.2

53.3

15.5

52.3

Tenth

39.6

100.0

46.7

100.0

47.7

100.0

The richest 5%

28.3

34.1

34.9

The richest 1%

11.9

14.7

14.9

Source: FIBGE (1979: 63–4) and Calsing (1983: 37).

(p.107) Data presented by Denslow and Tyler (1983) differ slightly from the above table and point to a marginal improvement in the distribution of income between 1970 and 1980. Even so, the pattern is one of extreme concentration. Their data show that the absolute increase in the average income of the highest decile, between 1970 and 1980, represented about 15 times the average total income of the lowest decile in 1980 and, conversely, that the average income of the lowest decile improved by less than 1 per cent of the average income of the highest decile.

It should be noted, furthermore, that data on the distribution of income from dividends, interests, and rents have not been systematically studied; and very little is known about the distribution of wealth with the exception of land assets (Hoffman 1986: 76).

A striking feature of the Brazilian economy has been the gradual erosion of the purchasing power of the Salário Ḿinimo (minimum wage). According to DIIESE, a trade union think tank, in 1985 the average purchasing power of the SM was less than 50 per cent of its initial value, established in July 1940 (see Fig. 3.4). Accordingly, in São Paulo in December 1985, 77.7 per cent of workers were earning less than the original minimum legal wage adjusted for the increase of prices (UNICAMP 1986).

3 Growth and Poverty: Some Lessons from Brazil

Fig. 3.4. Evolution of the purchasing power of the legal minimum wage, Brazil, 1940–1986

Source: DIEESE, after Folha de São Paulo.

This reduction in the purchasing power of the SM should be contrasted with a more than threefold increase of average income per head between 1940 and 1983.7 Singer (1986) calculated the ratios of legal minimum monthly wage to (p.108) average monthly GNP per head. This ratio was 2.1 in 1960, 1.64 in 1969, 1.0 in 1970, 0.41 in 1980, and 0.44 in 1983.

3.3. Malnutrition and hunger

Josue de Castro's A geografia da fome, published in 1946, opened a new area of studies on the ecology of endemic and epidemic starvation and of partial, specific, and occult nutritional deficiencies. Unfortunately his pioneering efforts were not continued and all recent publications on malnutrition and hunger in Brazil8 are still based on the ENDEF study conducted in 1975 by the Brazilian authorities with the assistance of the FAO. Lack of more recent data precludes a reliable assessment of the impact of the 1981–4 recession and the shifts that occurred in the consumption patterns of the population (e.g. less rice and beans, compensated by a higher intake of noodles made out of subsidized wheat, and lower consumption of beef).

The ENDEF data, as summarized by Knight and Moran (1981), show that the diets of only 33 per cent of the population in 1975 met the FAO/WHO low calorie requirements, while protein requirements are almost always met in diets composed of the foods normally consumed by the Brazilians (this may have changed in recent years, however, in connection with the shifts suggested above). The diets of 17 per cent of the population were deficient by more than 400 calories. As much as 49 per cent of the urban population in the Nordeste suffered from these serious deficits (see Table 3.5).

Table 3.5 Estimates of dietary deficiency in Brazil, 1975

Region and urban or rural location

Total population (000)

Persons whose diets are adequate

Persons having deficits of up to 200 calories

Persons having deficits of 200–400 calories

Total deficits up to 400 calories (m. calories/day)

Deficits of more than 400 calories

Total of all deficits (m. calories/day)

Persons (000)

% of total

Average deficit (calories/person/day)

Total deficit (m. calories/day)

Thousands

% of total

Thousands

% of total

Thousands

% of total

North‐East

Rural

17,739.8

5,361.2

30.2

3,775.9

21.3

6,173.8

34.8

1,958.4

2,428.9

13.7

540

1,310.4

3,268.8

Urban

14,291.7

1,217.6

8.5

1,460.6

10.2

4,660.8

32.6

1,473.0

6,952.6

48.7

529

3,678.4

5,151.3

Total

32,031.5

6,578.3

20.5

5,236.5

16.4

10,834.6

33.8

3,431.4

9,381.5

29.3

532

4,988.8

8,420.0

South‐East

Rural

20,046.2

14,010.9

69.9

2,408.2

12.0

3,305.3

16.5

943.1

321.7

1.6

476

153.3

1,096.3

Urban

44,524.8

13,195.1

29.6

10,255.5

23.0

15,603.0

35.1

4,709.9

5,471.1

12.3

527

2,882.6

7,592.5

Total

64,571.0

27,206.1

42.1

12,663.7

19.6

18,908.3

29.3

5,653.0

5,792.8

9.0

524

3,035.9

8,688.8

Frontier

Rural

5,268.7

678.9

12.9

975.7

18.5

1,850.7

35.1

656.0

1,763.4

33.5

593

1,087.2

1,717.3

Urban

5,274.0

649.8

12.3

1,042.6

19.8

1,948.1

36.9

630.0

1,633.4

31.0

617

968.2

1,624.2

Total

10,542.7

1,328.7

12.6

2,018.3

19.2

3,798.8

36.0

1,286.0

3,396.8

32.2

605

2,055.4

3,341.4

All Brazil

Rural

43,054.7

20,051.0

46.6

7,226.7

16.8

11,427.2

26.1

3,531.5

4,514.0

10.5

565

2,550.8

6,082.3

Urban

64,090.5

15,062.6

23.5

12,691.8

19.8

22,114.5

34.8

6,858.5

14,057.1

21.9

536

7,529.1

14,367.6

Total

107,145.2

35,113.6

32.8

19,918.5

18.6

33,541.7

31.3

10,370.2

18,571.1

17.3

543

10,079.8

20,450.0

Note: Detail may not add to totals because of rounding.

Sources: Total population by region and urban or rural location from FIBGE (1977). All other estimates were derived from unpublished data of Estudo nacional da despesa familiar (ENDEF).

ENDEF anthropometric data have been used to estimate the extent of malnutrition according to the Gomez indices. From birth to the age of 17, only 42 per cent of all Brazilian children reached weights normal for their ages (see Table 3.6).

Table 3.6 Nutritional status of children to the age of 17, by region, Brazil, 1975

Nutritional status

Children (000)

% of the age group

All Brazil

North‐East

South‐East

Frontier

All Brazil

North‐East

South‐East

Frontier

Adequately nourished

21,723

5,231

14,376

2,116

41.7

31.6

48.3

37.0

First‐degree malnutrition

19,349

6,332

10,783

2,234

37.2

38.2

36.2

39.0

Second‐degree malnutrition

10,543

4,630

4,581

1,131

20.2

28.0

15.4

23.3

Third‐degree malnutrition

447

361

44

42

0.9

2.2

0.2

0.7

Source: Knight et al. (1979: Annex 3, Tables 16–19).

It may be assumed that the situation has worsened in the following ten years on three accounts: the decrease in the per capita availability of staple foods, the increase in relative prices of food, and the higher incidence of unemployment and underemployment, particularly during the 1981–4 recession.

As already mentioned, Homem de Melo (1985) calculated that in 1984 the per capita production of five staple foods (rice, beans, corn, cassava, and potatoes) was 15.1 per cent lower than in 1977, while that of exportable crops (soybeans, oranges, tobacco, cocoa, cotton, and peanuts) increased by 13.3 per cent and that of sugarcane by 74.8 per cent. The per capita production of meat remained stable. According to Ivan Ribeiro (Gazeta mercantil, 23 Apr. 1986), the per capita availability of staple foods decreased by 25 per cent between 1965 and 1985.

According to recent estimates, 78 million out of 138 million Brazilians suffer from nutritional deficiencies (EXAME, 12 Nov. 1986).

(p.109)

(p.110)

(p.111) 3.5. Unemployment and underemployment

Definitional problems mar the official surveys of unemployment to the point of making them irrelevant. Underemployment is an even more arbitrary concept. Jaguaribe puts unemployment (including urban underemployment) at 13 million people in 1983, i.e. one‐quarter of the economically active population. In the same year, only 60,000 jobs were created in the organized sector; this was, however, an abnormally low figure. During the three years 1981–3 only 700,000 jobs were created, according to estimates of the Ministry of Labour. Another 1.8 million became vacant by death or retirement. The new entrants on the labour market during these years of recession numbered at least 4.5 million. Thus, the number of open unemployed must have increased by about 2 million people (Adriano Lopes de Oliveira, EXAME, 12 Dec. 1984). In 1985 employment grew by about 1.5 million. When offset against the figure of new entrants, this figure gives little margin to absorb the backlog of unemployed and underemployed, the more so since many enterprises affected by the recession managed to improve their situation by undertaking labour‐displacing rather than capacity‐augmenting investment.

The situation is particularly dramatic in the large cities of Nordeste swollen by a massive influx of ‘rural refugees’ under the combined effect of the recession and of five years of a very severe drought, which affects the region periodically. A 1984 survey conducted in Recife showed that over 9 per cent of the economically active population did not have any income, 13 per cent earned less than 0.5 SM, and another 16 per cent earned between 0.5 and 1 SM (Senhor, 22 Apr. 1986). In Fortaleza open unemployment in 1984 was evaluated at 15 per cent of the economically active population and underemployment at 43 per cent. In the organized sector 36 per cent of the workers earned less than 1 SM (personal communication from the mayor's office).

In periods of drought, starvation is not uncommon among rural populations of Nordeste. The emergency public works programmes undertaken by the government have been of little help. Starving peasants move to the nearest towns. Occasionally violence breaks out and food stores are looted. During the last recession, sporadic cases of looting of supermarkets also occurred in São Paulo and Rio de Janeiro.

3.6. Other social interests

To complete the description of the social conditions in Brazil we shall briefly review a few other indicators.

Life expectancy at birth in 1976 was 54.8 years for families earning up to 1 SM, and 69.6 years for families earning more than 5 SM (Calsing 1983). The comparison between São Paulo and Nordeste shows, once more, a striking contrast (see Table 3.7).

Table 3.7 Life expectancy, Brazil, 1970 and 1977

Brazil

North‐East

São Paulo state

São Paulo metropolitan region

1970

1977

1970

1977

1970

1977

1970

1977

Urban

Per capita income ≤0.5 SM

52.53

55.43

44.64

49.77

55.77

62.89

58.25

59.91

Per capita income > 2 SM

66.58

68.97

62.12

64.68

69.53

69.64

69.32

70.37

Rural

Per capita income ≤ 0.5 SM

52.48

45.95

56.50

Per capita income >2 SM

Total

Per capita income ≤0.5 SM

52.53

55.43

44.66

48.63

55.77

62.89

58.25

59.91

Per capita income > 2 SM

66.58

68.97

62.12

64.68

69.53

69.64

69.32

70.37

Source: Calsing (1983).

(p.112)

(p.113)

(p.114) Infant mortality in Brazil has been decreasing lately. But it is still about five times as high as in the United States. Cuba and Colombia fare much better (see Fig. 3.5).

3 Growth and Poverty: Some Lessons from Brazil

Fig. 3.5. Infant mortality, Brazil and selected countries, 1950–1982

Source: IBGE, UNICEF, Situação mundial da infancia—1985; Demographic Yearbook (1971).

The gap is very large between families earning up to 1 SM and those with more than 5 SM. The respective mortality indicators are 118.6 per thousand and 53.0 per thousand for children below 5 years of age (Calsing 1983).

Data on housing illustrate the precarious living conditions of the low‐income populations (Table 3.8).

Table 3.8 Housing conditions, Brazil, 1978

Income category by household

No. of households (000)

Percentage of households with

Five amenitiesa

Four amenities

Three amenities

Two amenities

One amenity

No amenities

Unspecified

≤ 1 SM

1,597.0

11.7

12.3

21.5

27.3

19.1

7.9

0.2

>1 ≤ 2 SM

2,827.6

17.7

16.0

22.1

24.5

14.1

5.5

0.2

>2 ≤ 3 SM

2,267.3

26.6

22.0

20.2

19.9

8.5

2.7

0.1

>3 ≤ 5 SM

3,210.2

37.5

25.4

17.0

14.4

4.4

1.2

0.1

>5 ≤ 7 SM

1,842.9

49.8

27.7

11.5

8.7

2.0

0.3

0.1

>7 ≤ 10 SM

1,453.2

58.9

26.9

8.8

4.4

0.3

0.1

0.0

>10 SM

2,372.8

77.5

17.0

3.8

1.3

0.3

0.1

0.0

Without income

41.8

17.6

14.1

22.5

28.5

12.1

5.2

Unspecified

64.2

48.1

19.1

12.1

12.9

4.7

3.1

TOTAL

15,676.0

39.2

21.0

15.4

14.8

2.5

7.0

0.1

(a) The five amenities are: water supply, sanitation, density ≤ 1 person per room, durable construction, and electricity.

Source: Calsing (1983).

Access to education is still severely limited. Out of a population of 38.4 million in the 10 to 24 years age bracket, only 17.1 million were attending school in 1980, as shown in Table 3.9. Low education goes hand in hand with low pay for the majority of workers (see Table 3.10).

Table 3.9 School attendance, Brazil, 1980

Age bracket (years)

Population (m.)

School attendance (m.)

% of the population

10–14

13.5

9.6

70

15–19

13.3

5.6

42

20–4

11.6

1.9

16

Source: Data from FIBGE quoted by Dowbor (1986: 25).

Table 3.10 Levels of education and of income, Brazil, 1983

Years of schooling

Working population (m.)

Workers earning less than 2 minimum wages (m.)

% of workers with less than 2 minimum wages

0–1

10.0

7.7

77.1

1–2

6.3

4.3

68.2

3–4

13.9

8.0

57.3

5–8

9.5

5.1

54.5

9–11

5.5

2.1

37.1

12 or more

3.2

0.3

10.0

Unspecified

0.1

0.06

62.7

TOTAL

48.5

27.5

56.8

Source: Data from FIBGE quoted by Dowbow (1986: 25).

Finally, as far as racial relations are concerned, a survey conducted in 1982 by FIBGE pointed out that 77.5 per cent of the black workers and 70.8 per cent of ‘browns’ earned less than 2 SM while among the white working population the corresponding figure was 52.3 per cent (Dowbor 1986: 55).9 An earlier (p.115) study, conducted in 1976, but only recently released, indicated that the average wage level of browns was 45 per cent that of whites, while the level of blacks was only 35 per cent that of whites (The Economist, 10 May 1986, p. 42).

3.7. Conclusion

The continuous deterioration of the economic and political climate underlines the need for the country to face the structural problems exacerbated by twenty years of authoritarian regime: the anachronistic land tenure, the oligopolistic industrial structure, the extremely uneven income distribution, the enormous ‘social debt’ compounded by environmental disruption, not to speak of the foreign and internal debts. Jaguaribe's recommendations coincide to a considerable extent with the scenario of redistribution with growth put forward by Knight (1981), emphasizing investment in basic public services (through the state sector) and in basic wage goods (through the private sector) and also recommending a land reform, a financial reform, and a fiscal reform.10

Emergency social programmes are overdue. As already mentioned, the national plan (1986–9) announced several measures to broaden the schemes of food distribution to expectant mothers and infants, of free school meals, and of subsidized meals for certain categories of workers. The housing policies are to be revised, so as to step up the construction of housing for families earning less than 3 SM per month. However, the BNH (National Housing Bank) has been discontinued as a consequence of a deep financial crisis. Meeting the housing needs of the low‐income population would require a drastic departure from previous practices and a resort to substantial subsidization. The deficit of the public budget makes this target unrealistic, so long as a lasting solution is not found to reduce the burden of servicing the external and the internal debts.

In 1985, the outlays for the social programmes did not increase much (UNICAMP 1986). An ambitious social programme should not, however, represent a major financial difficulty, as the outlays involved are not so high and no foreign exchange is required. Right now, organizational problems seem more severe.

In a World Bank report, Knight et al. estimated that a virtually full coverage of the population needs in health, nutrition, education, housing, water supply, and sewerage could be achieved between the years 1990 and 2000 by government spending of the order of 5 to 6 per cent of GDP annually between now and then, with maximum additional taxation of approximately 2 per cent of GDP (see Knight and Moran 1981). Another estimate puts at 4 per cent of GDP a year the amount of resources required to lift the whole population to the poverty line (Fava quoted by Homem de Melo). In his report, Jaguaribe (p.116) (Jaguaribe et al. 1986) puts at 2 per cent of GNP per year the additional outlays on social services required to lift Brazil from the present state of social underdevelopment to the level of Greece by the year 2000. This figure is, however, obtained on a rather shaky basis by comparing Brazil's social expenditure with that of Greece.

Whether the order of magnitude is of 2 or 4 per cent of GDP, these figures ought to be compared with the 4 per cent of GNP drained abroad every year to pay for the interest on the foreign debt alone and another 4 per cent required before the recent monetary reform to service the internal debt.

Brazil, like many other developing countries, could thus afford to build a ‘welfare state’ without waiting for the levels of affluence of industrialized countries, provided that it makes extensive use of forms of public support that have a high manpower component and a low capital and foreign exchange component (e.g. education, primary health delivery systems, assisted self‐help housing construction, etc.).

Brazil has a remarkable ‘potential for endogenous development’ (see Sachs 1984): the cultural capacity to define a ‘national project’, the political‐administrative capacity to implement it, and a comprehensive and fairly autonomous (but not autarchic) techno‐industrial structure to sustain it. Furthermore, many opportunities exist to step up the country's economic growth through ‘non‐investment sources’: by eliminating wasteful patterns of resource use, making better use of existing productive capacities, and decreasing the rate of real depreciation by a better maintenance of equipments and infrastructures. All this provides a solid economic basis for a socially responsive development strategy. Whether political conditions to unfold it really exist remains to be seen.

(p.117) References

Bibliography references:

Abramovay, R. (1986), ‘Campo e reforma agrária’, in Nova república, um balanço (Pôrto Alegre: LPM).

Bacha, E. L., and Klein, H. S. (1986), A transiçäo incompleta: Brasil desde 1945 (Rio de Janeiro: Paz e terra).

Bardhan, P. (1985), The Political Economy of Development in India (Delhi: Oxford University Press).

Barros de Castro, A., and Pires de Souza, F. (1985), A economia brasileira em marcha forçada (Rio de Janeiro: Paz e terra).

Calsing, E. F. (1983), ‘Dimensionamento e caracterizaçäo da pobreza no Brazil’, mimeo (Brasilia: CNRH/IPEA/UNICEF).

———et al. (1985), Desigualdades sociais no Nordeste (Brasília: CNRH/IPEA/UNICEF/SUDENE).

Cardoso, F. H. (1980), As ideias em seu lugar: Ensaios sobre as teorias do desenvolvimento (Petrópolis: Vozes).

Cardoso, R. L., and Sachs, C. (1985), ‘Brésil: La Démocratie venue d'en bas’, Autogestions (Paris), 22.

Cardoso de Mello, J. M. (1982), O capitalismo tardio (Sāo Paulo: Brasiliense).

Chandler, W. V. (1986), ‘The Changing Role of the Market in National Economies’, Worldwatch Paper 72 (Washington, DC).

Denslow, D., jun., and Tyler, W. G. (1983), Perspectives on Poverty and Income Inequality in Brazil, (Washington, DC: World Bank).

Dowbor, L. (1986), Aspectos econômicos da educação (São Paulo: Ática).

Draibe, S. (1984), Rumos e metamorfoses: Estado e industrialização no Brasil: 1930–1960 (Rio de Janeiro: Paz e terra).

Faria, V. E. (1983), ‘Desenvolvimento, urbanização e mudanças na estrutura do emprego’, in Sorj, B., and Almeida, M. H. (eds.), Sociedade e política no Brasil pós 64 (São Paulo: Brasiliense).

Fundação instituto brasileiro de geografia e estatística (1977), Anuário estatístico do Brasil, 1976 (Rio de Janeiro: FIBGE).

———(1979), Indicadores sociais (Rio de Janeiro: FIBGE).

———(1982), Aspectos da evolçāo da agropecuária brasileira: 1940–1980 (Rio de Janeiro: FIBGE).

———(1984), Pesquisa nacional por amostra de domicílios (Rio de Janeiro: FIBGE).

Furtado, C. (1956), Formaçāo econômica do Brasil (Sāo Paulo: Editora nacional).

Goodman, D. (1986), ‘Economia e sociedade rurais a partir de 1945’, in Bacha and Klein (1986).

Gunatilleke, G., et al. (1984), Intersectoral Action for Health (Colombo: Marga Institute).

Hardoy, J. E., and Satterthwaite, D. (1987), ‘The Legal and the Illegal City’, in Rodwin, L. (ed.), Shelter, Settlements and Development (London: Arnold).

Hicks, J. F., and Vetter, M. D. (1983), ‘Identifying the Urban Poor in Brazil’, World Bank Staff Working Paper No. 565 (Washington, DC: World Bank).

Hirschman, A. O. (1986), ‘Out of Phase Again’, New York Review of Books, 18 Dec.

Hoffman, Helga (1986), ‘Pobreza e prosperidade no Brasil: o quê está mudando?’ in Bacha and Klein (1986).

(p.118) Homem de Melo, F. (1985), Prioridade agrícola: Sucesso ou fracasso? (Sāo Paulo: Pioneira).

Jaguaribe, H., et al. (1986), Brasil, 2000: Para um novo pacto social (Rio de Janeiro: Paz e terra).

Kalecki, M. (1976), Essays on Developing Economies (Hassocks: Harvester Press; Atlantic Highlands, NJ: Humanities Press).

Knight, P. T. (1981), Brazilian Socialeconomic Development: Issues for the Eighties, World Bank Reprint Series No. 203 (Washington, DC: World Bank).

———et al. (1979), Brazil: Human Resources Special Report (Washington, DC: World Bank).

———and Moran, R. J. (1981), Brazil (Washington, DC: World Bank).

Kurien, C. T. (1978), Poverty, Planning and Social Transformation (New Delhi: Allied Publishers).

Minayo, M. C. de S. (ed.) (1985), Raízes da fome (Petrópolis: Vozes).

Oliveira, F. de (1972), ‘A economia brasileira: Crítica da razāo dualista’, Estudos CEBRAP, 2.

Panikar, P. G. K., and Soman, C. R. (1984), Health Status of Kerala: Paradox of Economic Backwardness and Health Development (Trivandrum: Centre for Development Studies).

Pastore, J. (1986), ‘Desigualdade e mobilidade social: Dez anos depois’, in Bacha and Klein (1986).

Raj, J. N., et al. (1975), Poverty, Unemployment and Development Policy: A Case Study of Selected Issues with Reference to Kerala (New York: United Nations).

Sachs, I. (1979), Studies in Political Economy of Development (Oxford: Pergamon Press).

———(1983), ‘Le Potential de développement endogène’, Économie et sociétés, Cahiers de l'ISMEA, Paris, Series F, 29/17/2.

———(1984), Développer les champs de planification, Cahiers de l'UCI No. 2 (Paris: Université coopérative internationale).

———Maimon, D., and Tolmasquim, M. T. (1987), ‘The Social and Ecological Impacts of Pro‐alcool’, IDS Bulletin, 18.

Sau, R. (1985), ‘Expansion of Luxury Goods and Immiserisation of the Poor’, Economic and Political Weekly, 20.

Sen, A. K. (1981), Poverty and Famines (Oxford: Oxford University Press).

———(1986), ‘Food, Economics and Entitlements’, Working Paper/(Helsinki; WIDER/UNU); and Lloyds Bank Review, Apr.

Singer, P. (1986), Repartiçāo de renda: Pobres e ricos sob o regime militar (Rio de Janeiro: Jorge Zahar Ed).

———and Brandt, V. C. (eds.) (1980), Sāo Paulo: O povo em movimento (Petrópolis: Vozes/CEBRAP).

UNICAMP.(1986), Brasil 1985: Relatório sobre a situaçāo social do país (Campinas: UNICAMP).

Viacava et al. (1983), A desnutrição no Brasil (Petrópolis: FINEP/Vozes).

Notes:

(1) The income distribution among social strata will be discussed in more detail below. Recent years brought about a steady decrease of the share of earnings from labour in the national income and a corresponding increase in the relative share of profits. These passed from 49.7% in 1979 to 51.3% in 1983, out of which 80.8% was interest. No doubt Brazil became a paradise for financial capital, at least till the 1986 monetary reform (data of the Ministry of Labour, quoted by Folha de São Paulo, 20 Apr. 1986).

(2) The figures of urbanization are somewhat misleading, to the extent that many smaller towns with a population of less than 20,000 are inhabited by a majority of farmers and casual agricultural workers, the so‐called ‘boias frias’—landless peasants forced to migrate to the towns. Moreover, these towns have only the rudiments of an urban infrastructure. Thus, at least half of the Brazilian population is still rural and, in many cases, bypassed by the modernization processes (see Dowbor 1986: 46).

(3) The full text of the plan was published by Gazeta mercantil on 24 July 1986.

(4) This analysis is made on the basis of the Raj‐Sen four‐sector model, adapted by Sachs (1979) and used for the discussion of the Indian and Brazilian cases at Kalecki's seminar in Warsaw in the 1960s. For the distinction between ‘luxuries’ and ‘necessities’ see Kalecki (1976) and, later on, Sau (1985). The industrial structures corresponding to ‘development’ and ‘maldevelopment’ are schematized in Fig. 3.2.

(5) Thus Pastore (1986: 45) claims that 4 million people found employment in the informal urban sector between 1981 and 1983, a period of sharp recession and contraction of formal employment. During these two years of sharp recession formal employment in the cities decreased from 18.1 to 17.4 million, while the informal supposedly went up from 14.1 to 18.0 million, the net result being that open unemployment increased only insignificantly from 2 to 2.4 million people, nothing to worry about for people who accept such estimates at face value! The influential conservative newspaper O jornal da tarde carried in 1984 a series of articles on the informal sector presented as the last refuge of private initiative persecuted by Leviathan (the state).

(6) 11 billion litres of ethanol were produced in 1985, the equivalent of about 150,000 barrels of oil per day. The ‘Pro‐alcool’ is technically a success achieved at a very high economic cost with lavish residues. Though very expensive, it is now irreversible, as already some 3 million cars, out of a fleet of 12 million, are 100% alcohol powered and such cars account for 90% of the output of the Brazilian automotive industry (about one million per year). (For an evaluation, see Sachs et al. 1987.)

(7) The present value of the SM, using the official exchange rate, is about $60. This is, however, a somewhat misleading figure as the purchasing power of the cruzado, when related to the consumption pattern of the low‐income population, exceeds what is indicated on the basis of the exchange rate.

(8) See e.g. Viacava et al. (1983) and Minayo (1985).

(9) Out of a working population of 47.9 million, 27.5 million were ‘white’, 3.7 million ‘black’, and 16.2 million ‘brown’ (coloured).

(10) Knight recommends inter alia the lowering of indirect taxes on basic wage goods along with an increase in the indirect taxation of luxury consumption goods, much as suggested by Kalecki for India in 1959. Jaguaribe et al. (1986) advocate a capital tax on apparent signs of wealth, very appropriate in the Brazilian context.